Elliott Wave International
European debt crisis
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European Debt Crisis:
Portugal’s Bailout, One Year Later — Were You Prepared in Advance?
Many analysts had opinions before the bailout, but no one was talking about the most important indicator
Make no mistake: The stakes for financial and economic survival in Europe are high. Seemingly everyone — from investment bloggers to financial television hosts — has something to say about the European debt crisis.
But with so many divergent opinions to choose from, which ones should you trust? Continue reading
US Financial System: Is It Finally Stable?
US Financial System: Is It Finally Stable?
Bernanke comments raise questions about banks
Four years after we brushed up against “financial Armageddon,” did you think you’d be reading this?
Federal Reserve Chairman Ben Bernanke said…banks need to have more capital at hand in order to ensure the financial system is stable. Bernanke said regulators were taking steps to force financial institutions to hold higher capital buffers…
- Reuters, April 9
It appears our financial system is still not as stable as it needs to be. But guess who relaxed the banking system’s “capital buffers” in the first place? Continue reading
European Central Bank: “Great White Fear” Takes A Bite Out of Recovery
EWI’s Global Market Perspective foresaw the shift in European banks from lenders to savers via one remarkable chart
It’s been over two years since the European Central Bank began its open-heart surgery of the eurozone’s anemic economy. So far, the procedure has included an unprecedented $3 trillion-plus in bailouts, monetary transfusions, AND toxic debt transplants.
Yet, according to a recent slew of discomforting news reports, the economies across the pond would still flatline in seconds without constant life support. Here, an April 18, 2012, Wall Street Journal writes:
“Europe Hemorrhages through Refinancing Operation Band-Aid” and reveals that Europe’s banking sector has wolfed down three years of Long Term Refinancing Operations (LTROs) in under four months.
The question is — what went wrong? Continue reading
Is the United States Headed Down Europe’s Financial Road?
Europe’s economy is contracting
The recent Greek debt deal produced a big collective sigh of relief, plus some cheers for that massive liquidity injection into Europe’s banking system.
It was time to grab a glass and offer a toast to the coming economic recovery of the European Union, right?
Alas, it turns out that Europe’s private sector economic activity is contracting faster than expected.
The latest Markit composite purchasing managers’ index fell to a three-month low. And the survey for that index was conducted in Germany and France, two of the eurozone’s bigger economies.
Markit’s chief economist told Marketwatch (3/22) “The euro-zone economy contracted at a faster rate in March, suggesting that the region has fallen back into recession…”
Citigroup’s chief economist told CNBC (3/22) that Europe’s financial problems have merely been delayed for another day. “We have really just paused for breath,” he said. “It [the long-term refinancing operation] really hasn’t solved the problem, and for Europe the worst is still to come.” Continue reading
Capital Safety: Is There Such a Thing as “TOO Safe”
We all know that the stock market has been rising for 3 years. Many economic measures — unemployment, consumer spending and confidence, etc. — also show strong improvement. Yet is that a good reason to stay bullish on stocks?
What a silly question, some people might say. But before you give a reply, please take a look at these financial news headlines — and then guess when they were published:
- Fed chief predicts economy will rebound despite housing woes (AP)
- IMF predicts an energetic world economy (StarTribune.com)
- US Treasury says economy strong…? (Reuters)
- Job Growth Strengthens Economy (Washington Post)
- Several Signs the Economy Is Reviving (New York Times)
Did they publish this week? Last week? Last month? No. All published in mid-2007, right before the global financial crisis cut the DJIA by 54%; S&P 500 and CRB Commodities Index by 57%; oil by 78%. Gold, emerging markets, and real estate also fell hard. Even bonds were no “safe haven,” as 2009 was the worst year on record for U.S. 30-year Treasury bonds and 10-year T-notes: down 26% and 9.7%, respectively.
This chart shows you just how mistaken all that “strong fundamentals” optimism really was (courtesy: Bloomberg): Continue reading
Are the Efforts of the World Central Banks Working?
The Fed is not the world’s only central bank dealing with debt. Watch as Steve Hochberg, EWI’s chief market analyst, shows what has happened to GDP in countries around the world as other central banks try to “inject liquidity” into the system.
 | EWI’s NEW free report, The Economic Rot Beneath, reveals important economic numbers that you are not currently reading in the mainstream headlines — but you should be. For instance, did you know stocks priced in real money (gold) are down 87%? Or that U.S. manufacturing jobs are half of what they were in 1979? Or that housing starts per capita are back to 1922 levels? Learn what’s really going on in the U.S. economy. Download your free report now. |
R.N. Elliott Discovered the Wave Principle Over 70 Years Ago
This is your opportunity to learn the method that has stood the test of time
In the 1930s, Ralph N. Elliott discovered that stock market prices tend to move in recurring patterns. He defined these patterns (or “waves”) and explained how they combine to create larger versions of themselves. He called his discovery the Wave Principle.
After much research into R.N. Elliott’s work, A.J. Frost and Robert Prechter published the 1978 text Elliott Wave Principle. This lesson captures a flavor of Elliott’s fascinating approach to market analysis.
The first step in Elliott wave analysis is identifying patterns in market prices. At their core, wave patterns are simple; there are only two of them: “motive waves,” and “corrective waves.” Motive waves are composed of five sub-waves and move in the same direction as the trend of the next larger size. A corrective wave follows, composed of three sub-waves, and it moves against the trend of the next larger size. As the picture below shows, these two patterns form similar structures of larger sizes, or “degrees,” as R.N. Elliott, the discoverer of the Wave Principle, called them. Continue reading
Forex Market Insight: EUR/USD Rallies…Why?
Elliott wave patterns suggested a bullish reversal a day before the rally
On February 16, EUR/USD, the euro-dollar exchange rate and the most actively traded forex pair, surged over 170 pips, from below $1.30 to above $1.3150.
The explanations for the strong rally boiled down to “hopes” that the Greek bond-swap deal would be reached.
As we’ve pointed out before, explanations such as these make sense only in retrospect. They tell you nothing about tomorrow’s trend.
On February 15, while EUR/USD was still in the downtrend, Elliott Wave International’s forex-focused Currency Specialty Service posted the following intraday forecast:
EURUSD (Intraday)
Posted On: Feb 15 2012 1:28PM ET / Feb 15 2012 6:28PM GMT
Last Price: 1.3068
[Approaching a bottom]
The decline from 1.3322 looks mature, though there is no evidence it is complete. Allow for a dip below 1.3027 (to complete a flat correction) but we’re focusing on identifying the upcoming reversal. A rally in five waves at small degree would do the trick. Continue reading
Want to Know Who’s Going to Be President? Ask the Stock Market
A recently-published, landmark research paper shows the link between stock market performance and presidential election winners.
What’s the biggest influence on the outcome of presidential elections?
Many observers would identify the role of campaign spending by super PACs, a candidate’s debate performance, and, of course, the health of the economy (“stupid”).
Yet if you want an answer backed by a large body of evidence, you’ll find one in the recently-published, landmark research paper by Robert Prechter, Deepak Goel, Wayne Parker and Matthew Lampert, titled “Social Mood, Stock Market Performance and US Presidential Elections.”
A lot of time, data analysis, and copious statistical evidence led them to this straightforward result: “Social mood as reflected by the stock market is a more powerful regulator of re-election outcomes than economic variables such as GDP, inflation and unemployment…”
In other words: If you want a good predictor for the result of an incumbent president’s re-election, look to the stock market.
Large amounts of earlier research have focused on stock performance after a presidential election. But very few scholars have reversed that order, to investigate a possible link between elections and preceding stock market performance. So reverse that order is what the authors did. What’s more, they’re the only ones to study the issue from a socionomic perspective — the premise that waves of social mood simultaneously drive the valuations of stocks and sitting presidents.
The group published their research on January 17, and it’s already getting attention. A Washington Post columnist read the paper and got its practical usefulness, by noting that Obama should benefit from a stock market that’s been mostly higher since 2008, while a Republican challenger “should hope the Dow crashes.”
You can read the entire research paper yourself by following this link >>
Do Low Interest Rates Power Stocks Higher?
This chart debunks a long-held myth.
Back in the day, one of the first things I “learned” about investing was that low or declining interest rates are good for stock prices.
I’ve since had to “unlearn” this.
A certain market commentator recently reminded me of the “lower rates equal higher stocks” myth. He opined that stocks aren’t being kept afloat by hopes for a European debt solution, but then claimed that the real reason to be bullish is very low interest rates.
Yet is the near-zero rate on T-bills the reason stocks have held up since early October?
“[The chart below] shows a history of the four biggest stock market declines of the past hundred years. They display routs of 54% to 89%. In all these cases, interest rates fell, and in two of those cases they went all the way to zero! In those cases, investors should have traded all their bonds for stocks. But they didn’t; instead, they sold stocks and bought bonds.”
Elliott Wave Theorist, February 2010
Have a look at the chart: Continue reading
